It’s been a rough few weeks for energy investors, and that’s putting it mildly. Oil stocks just can’t catch a break, with neither OPEC nor the federal government’s stimulus plans going far enough. However, there is still a case for going long on the best stocks. Let’s take a look at some of the best and worst Canadian energy stocks to buy with a view to hold long term.
Some of the best Canadian energy stocks to own
Northland Power is a strong buy for its clean energy asset portfolio and geographical diversification. Its offshore wind partnerships are of particular interest and span Europe and Asia. Its thermal and solar power generation backs up the renewables side of Northland’s operations. A 4% dividend yield is on offer from this top Canadian energy stockand looks secure for the time being.
Brookfield Renewable Partners pairs the expertise of the Brookfield brand with the upside potential of the green economy. This TSX energy name has remained resilient in the last three months. Its 4.6% yield is suitably rich for long-term investors adding to a retirement nest egg or TFSA. It’s strongly diversified, too, with a mix of hydroelectric, wind, solar, storage, and biomass operations across Europe and the Americas.
Fortis is one of the best dividend stocks on the TSX, hands down. It’s having a tougher time of late, though. Electricity usage is declining, as businesses shutter amid the ongoing coronavirus outbreak. This has been something of a shock to energy stock investors. Everybody could see the downside in oil. But who saw it in electricity? Still, Fortis has an exemplary track record in dividend payments, making it a buy.
These Canadian energy stocks are tanking
Suncor Energy has gone from being a star stock to a worrisome liability in a portfolio. This famous name has lost 53% in the last three months. What has led to this steep decline in fortunes? Investors steering a course through TSX energy stocks are giving crude a miss. Suncor is whipsawing in response, up more than 20% this month but down 10% in the last week. This name is looking less like a contrarian buy and more like a falling knife.
Vermilion Energy has also seen huge troughs and some staggering rallies. But the ride looks like it may be over for now. The business has cut its dividend twice, hastening an even steeper decline than the market. Then came the news that Vermilion had suspended its monthly dividend entirely. It was easy to look at Vermilion with a contrarian eye back when its payout looked at least halfway stable. Plunging 20%, this is now a name for true long-term oil bulls only.
The bottom line
Three-month performances are a strong indicator of resilience. However, another useful shorthand for market resilience would be exposure to crude. Investors may want to start trimming oil-heavy names from their stock portfolios and replace them with more diversified energy producers. Green energy names are looking like an especially strong play for long-term upside in a huge growth market.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Victoria Hetherington has no position in any of the stocks mentioned.